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Know-nothing investor? Warren Buffett suggests an index fund (eg Satrix Top 40)

The Money Show’s Bruce Whitfield interviewed Berkshire Hathaway correspondent Warren Ingram for his weekly personal finance feature.

Ingram discussed Warren Buffett’s views on index investing vs active management.

Buffet, famously, told his executors to invest 90% of the money he is leaving to his wife in an index.

However, Berkshire Hathaway is very much an active manager. Buffet has even recommended a few fund managers over the years.

What gives?

Buffett is firm believer in active investing for long term capital growth, but if you need more certainty of income then other methods – such as a combination of equities and bonds - are appropriate.

Scroll down for quotes from the video and audio below.

The stock market never moves up in a straight line. This is the same whether you buy an index or a share.

Warren Ingram, 702/CapeTalk's resident personal finance expert

About half of your growth will come from reinvesting dividends.

Warren Ingram, 702/CapeTalk's resident personal finance expert

You have to be prepared to take a five to 10 year view.

Warren Ingram, 702/CapeTalk's resident personal finance expert

Preference shares do have a role to play. But only a small one.

Warren Ingram, 702/CapeTalk's resident personal finance expert

You must diversify your portfolio!

Warren Ingram, 702/CapeTalk's resident personal finance expert

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This article first appeared on 702 : Know-nothing investor? Warren Buffett suggests an index fund (eg Satrix Top 40)


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